FedEx Ground Settles $3M Lawsuit
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FedEx Ground Settles $3M Lawsuit 

 By Sarah Pierce

FedEx Ground Truck(LEGAFI) -- The Massachusetts Attorney General’s office has ordered FedEx Ground to pay more than $3 million to settle claims the company misclassified its drivers as independent contractors. The ruling is a major victory for thousands of FedEx Ground drivers across the country that are waiting for their long-running class action lawsuits against the company to finally be resolved.

 

This time last year, FedEx Ground was involved in 28 class action lawsuits by contract drivers who claimed they’re owed benefits because FedEx treats them as full-time employees by mandating their clothing, hours and prices. To give you an idea of the scope of litigation FedEx Ground is facing, one of these class action lawsuits represents an estimated 27,000 current and former ground-delivery drivers who are seeking nearly $1 billion in damages for back pay, truck purchases, overtime and costs they incurred as contractors, according to a Bloomberg news report. There are also several individual lawsuits and 40 state tax and other administrative proceedings filed against FedEx Ground that argue the company’s owner-operators should also be classified as employees. In 2007, FedEx agreed to pay $26.8 million to settle a decade-long class action lawsuit with 203 drivers who claimed they were misclassified as independent contractors.

 

Last month’s ruling by the Massachusetts Attorney General’s office does not affect the still-pending class action lawsuits against FedEx Ground, but it does represent a victory in the sense that it’s yet another ruling favorably agreeing with the drivers’ allegations. The Attorney General’s office cited FedEx Ground for violating the Independent Contractor law by misclassifying its drivers, failing to provide proper paystubs, failing to provide workers’ compensation, not paying overtime to certain drivers, and neglecting to deduct and withhold state income taxes. Their investigation also revealed that FedEx Ground’s misclassification of employees resulted in significant underpayments to the Department of Revenue, Division of Industrial Accidents and Department of Unemployment Assistance.

 

The $3 million settlement, which includes the underpayments FedEx owed, will be paid to the Massachusetts Commonwealth’s general fund. The settlement also includes an undisclosed payment for 13 drivers named in the Attorney General’s citation. More information about the FedEx Ground drivers’ nationwide class action lawsuits can be found here.

Updated August 4th, 2010

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